The all-day program opened with welcoming remarks by Dean Richard Revesz. Panel chairs included William T. Allen, the Pollack Center’s director and Nusbaum Professor of Law and Business, and Law School Trustee Martin Lipton ’55. Distinguished Scholar in Residence and Senior Lecturer Gerald Rosenfeld, co-director of the Law School’s Jacobson Leadership Program in Law and Business, joined Allen’s panel, “The Board and the CEO: Leadership, Succession, and Compensation.”

In the day’s keynote, John Thain, chairman and CEO of CIT Group Inc. and former chairman and CEO of Merrill Lynch, discussed the role of boards of directors in light of the financial crisis.

After an introduction by Peter Blair Henry, dean of the Stern School of Business, Thain enumerated what he thought didn’t cause the financial crisis: credit default swaps, discretionary compensation, and proprietary trading. He also added a last, tongue-in-cheek item to the list: “A 31-year-old Frenchman did not cause the financial crisis,” he said, alluding to Fabrice Tourre, the Goldman Sachs vice president charged by the SEC with securities fraud last month.

The crisis had three main causes, Thain argued: monetary policy, or "too much money available for too long at too low a price"; too much leverage in the housing market, on the part of consumers, and in financial institutions; and failure of risk management in various companies. Thain acknowledged that “it’s a difficult process to manage risk, because one of the keys to risk management is thinking of the things that can never happen.”

Thain suggested that boards should make sure their members have sufficient expertise to understand the business of the company, particularly complex financial service products; have risk committees; ensure a direct line of communication from the chief risk officer to the CEO; examine compensation structure with an eye for risk control versus risk taking and for verifying that compensation aligns with long-term shareholder value; and instill a culture of risk management throughout the company.

Thain’s final note involved an often-heard phrase among politicians in the aftermath of financial disasters: “We have to make sure this never happens again.” This is an impossible task, he argued.

When you’re in the midst of a bubble, it’s difficult to see it, he said. “It isn’t very likely, as long as we have functioning markets, that we’re actually going to eliminate bubbles, manias, and crashes, because they are a symptom of markets…. Markets are susceptible to bubbles, and the real key is to try to minimize their impact, minimize the damage that they do, and manage them going forward.”